Banking and Payments Industry in Europe and Middle East" Trends and Perspectives!

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1 Banking and Payments Industry in Europe and Middle East" Trends and Perspectives October 28, 2015 Presented by Konstantin Abramov" Independent Expert

2 Global Trends in Payments" Further digitalization Data: from collection to analysis and active usage Cardless real-time payments will emerge Rapid growth of cross border financial services Payments would become a cornerstone of digital banking Global payments industry would be growing at 8% Y2Y to reach 2,3 TRN by 2018 or 43% of all banking revenues Data by McKinsey Global Payments 2014 Report / McKinsey Global Banking Annual Review 2015

3 Data by millennialdisrupconindex.com

4 The essence of fintech revolution:" Why does it cost so much to move money and what are we going to do about it?

5 CNBC 50 Disruptor List 2015" 8 Transferwise funding $91 mln " " "Getting bankers out of the forex business 33 Klarna funding $300 mln " " "No digital kart left behind 40 Square funding $590 mln " " "Saying good-bye to cash only " " " Data by CNBC 50 Disruptor List 2015 hkp:// disruptors/

6 Top trends in European payments" Data by Celent (Olyver Wyman Group) Top Trends in Retail Payments 2015 / own analisys / coinspot.io

7 The Resurgence of NFC Going cashless Mobile Payments & Mobile Acceptance Money Transfers Made Easy (and Cheap) Crypto protocols: The Promise of a Disruptive Future Tokenization & Biometric authentication Data by Celent (Olyver Wyman Group) Top Trends in Retail Payments 2015 / own analisys / coinspot.io

8 NFC finally gaining momentum" Categories" " " " " " "Examples " " " " " TradiConal NFC Payment (SIM based SE) HCE MNO and Bank SoluCons MNO- only SoluCons Third Party Apps Bank Apps Valyuo (Norway): Telenor, DNB Vodafone Smartpass (ES,NL,D,UK) OrangeCash (France) Google Wallet (US) Bankinter,BBVA,BancoSabadell (ES) Sberbank(Russia) Unique implementacons ios Other ApplePay Transport for London(UK) MasterCard issued a mandate for all POS terminals in Europe to be contactless by "

9 Mobile Payments" Mobile payment is going mainstream in Europe Success depends on consumers and retailers adopting a new payment system Mobile at the point of sale Mobile as the point of sale The mobile payment pla\orm Direct carrier billing Closed loop mobile payments Sources: Mobilepaymentstoday.com, informacon- age.com

10 Mobile Payment Acceptance " " " "Way to cashless society" Sweden: According to Stockholm's KTH Royal Institute of Technology there are abou- t 8 bn in circulation in the country's wallets and cash registers down from 106 billion just six years beforehand. Denmark: retail to go cashless by Jan 2016 M-Pesa launch in Romania Although there is a short distance geographically between European countries, there can be big difference in how people choose to pay Sources: Techradar.com, Charmain Oak Finextra.com

11 Alternative CNP Payments"

12 Cross Border Remittance & Fx"

13 Data by coinmap.org Bitcoin acceptance"

14 Digital Currency" UK government invests 10m in distributed ledger technology research Blockchain initiative backed by 9 large investment banks - R3CEV. Deutsche Bank Distributed ledger technology has the potential to enhance transparency and the security of data, among other things. Data by Finextracom, FT.com, banknxt.com

15 Tokenization & Biometric Authentication" Tokenization effectively becomes industry standard and has been accepted by the major players and supported by majority of providers. " " " "Biometrics are being widely delpoyed by different " " " " "players and are standard feature or smartphones " " " " and tablets.

16 Payments and financial services landscape in Middle East" Data by Cornell University, Insead and the World Intellectual Property OrganisaCon

17 Region is still very dependent on cheques and cash Regulatory landscape is challenging Government plays important role in digitizing processes and sets the example Strong move into mobile payments Global Innovation Index*: Saudi Arabia 43 rd UAE 47 th Qatar 50 th Data by Cornell University, Insead and the World Intellectual Property OrganisaCon

18 Middle East: Region Data" 279,192,238 Total population Urban 72% 28% Rural 102,346,717 Internet users 66,900,000 Active social network users 311,419,837 Active mobile subscriptions Data by wearesocial.sg, % Internet penetration 24% Social networking penetration 112% Mobile penetration

19 Middle East: Wages Protection Systems GCC countries are launching Wage Protection System initiatives programs that ensure transparency and security of the payroll for the workers Every worker is being issued a card - close loop or open loop to be used at ATMs and retails and with certain emerging product - at digital platforms as well

20 UAE: Emirates ID Government issued CHIP ID card that is being used for identification for different government and nongovernment services. There are plans to introduce payment functionality.

21 UAE: e-dirham Closed loop payment scheme for government related services in UAE, launched in 2001, 2 nd gen in Mandatory in most of the government entities as a the only payment tool. Channels available: Prepaid Cards and Credit Cards EFTPOS: Payment via counter EIPG: Online Payment and ecommerce evouchers Direct debit from bank accounts* Payment via mobile phones* Payment via an electronic kiosk* Payment through a virtual wallet*

22 Zomato Cashless Closure Cashless wasn t a part of the natural user flow for a typical Zomato user. Most of our users were the avid early adopters of technology products. Too cumbersome for merchants Customer acquisition cost was too high

23 Contacts Konstantin Abramov Independent Payments Expert